Strategic Capability and Organizational Performance of Commercial Banks in Kenya
DOI:
https://doi.org/10.53819/81018102t70115Abstract
Strategic capability has become an essential factor in the performance of commercial banks within a competitive, technology-dependent, and well-regulated environment. This paper examines the effect of strategic capability on organizational performance of the commercial banks in Kenya focusing on leadership alignment, resource optimization, and technological innovation. The paper was anchored in the Resource-Based View (RBV), which emphasizes the effective development and deployment of valuable internal resources and capabilities. A pragmatic research philosophy and a mixed-methods design were adopted. The study was conducted among licensed commercial banks across the three banking tiers in Kenya. Primary data were collected using a semi-structured questionnaire containing closed-ended Likert-scale items and open-ended questions. Quantitative responses were analyzed using descriptive and inferential statistics, while qualitative responses were analyzed thematically. The two strands were integrated during interpretation of the findings. Overall, the findings indicated a high level of strategic capability among commercial banks, characterized by leadership alignment, efficient use of organizational resources, and technology deployment in strategic implementation. Strategic capability had a positive and statistically significant effect on the organizational performance; therefore, the null hypothesis was rejected. Qualitative results also revealed that leadership responsiveness, a knowledgeable workforce, technological adaptation, and judicious use of resources were found to enhance competitiveness, service efficiency and managerial decision-making processes. The paper concludes that strategic capability is a key determinant of commercial banks' performance in Kenya. It recommends that banks strengthen leadership alignment, establish formal mechanisms for optimizing resources, and ensure that technology investments remain aligned with strategic objectives and performance measures.
Keywords: Strategic Capability, Leadership Alignment, Resource Optimization, Technological Innovation, Organizational Performance, Commercial Banks.
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